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Tuesday, September 9, 2008

CapitaLand Sells Somerset Orchard

Source : TODAY, Tuesday, September 9, 2008

FOLLOWING asset sales in China and Malaysia, CapitaLand yesterday said it has sold the Somerset Orchard serviced residence to OG Pte Ltd for $100 million in cash.

The real estate group expects to book a gross gain of $43 million from the sale of the 88-unit block, which has acarrying value of $57 million.

The property was owned by CapitaLand’s serviced apartment subsidiary, the Ascott Group, which will continue to manage the apartments for 15 years with the option to renew the contract for another 10 years.

The purchase price for the block, which is located above Orchard Point, works out to about $1,530 per sq ft.

OG bought Orchard Point’s four-storey retail podium from Ascott in 2001. The company runs its OG department store in the podium and had the first right of refusal for the serviced apartments based on a previous agreement. OG declined to comment when contacted about its purchase.

Ms Jeannie Chua, Ascott’s president, said: “The divestment of Somerset Orchard is part of our strategy to efficiently manage our capital assets to ensure that they are redeployed and reinvested in higher-yielding assets and for expansion in high growth markets.”

Mr Chong Kee Hiong, deputy chief executive of finance and investment from Ascott, said proceeds from this sale will be channeled to other opportunities to enhance the global presence of the company.

He said: “Since the beginning of the year, Ascott has made strategic investments in keycities of Melbourne in Australia, Ahmedabad in India and London in the United Kingdom.”

At the end of last month, CapitaLand sold its 30-per-cent stake in Inverfin, whose principal asset is a 50-storey building in Kuala Lumpur. The deal, worth about RM176 million ($73 million), gave the company a gain of about $22 million.

The company last week also sold its Chinese office property, Capital Tower Beijing, for US$352 million ($501 million) and recognised a gain of $163 million.